Jones Lang LaSalle Hotels Forecasts $20B Drop In ’08 Deal Volume

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CHICAGO— Following the record-shattering hotel transaction volume total of $45 billion in 2007, Jones Lang LaSalle Hotels is forecasting in its latest investment report that 2008’s volume will fall considerably and land between $23 billion and $26 billion. However, the firm pointed out that 2008 will still represent the third strongest year in history at its projected levels.

Though there are not many transactions being closed at the moment, Jones Lang LaSalle Hotels predicted in its report that once there is more stability in the debt markets transaction activity will rise again this year. The report further noted that there currently is a dislocation of values between buyers and sellers. But since sellers are not seeing reduced fundamentals, they are reluctant to adjust their target prices. This fact could contribute to eventual longer hold periods for owners.

Those owners, of course, are still enjoying strong operating fundamentals. However, Jones Lang LaSalle Hotels pointed out that since the lodging business often exhibits a two-quarter lag behind broader economic trends, RevPAR growth will eventually slow further.

HX: The Hotel Experience Has Its Own Story to Tell
The Hotel Business team just returned from this year’s HX: The Hotel Experience, which was held in New York City at the Jacob K. Javits Convention Center. As we usually do post-event, we talk amongst ourselves about trends we noticed at the show, held in conjunction with BDNY. And while the latter—and now larger—show was abundant with design trends (let’s just say blue seemed the prevalent color; bold, geometric forms the dominant shape; and metallics a common thread…pun intended!), the more traditional “hotel” side of the convention center had its own story to tell.